The system has provided good results in the 15 years since the reform– The quality of pensions must be improved: Guillermo ArthurCancún, Q. Roo, May 31, 2012 – “15 years after the reform of the pension system, the assets of the Afores amount to more than 11 percent of GDB, with a historical return of 6.5%, and the returns generated by the Afores are 37% of their total balance of 1.6 billion,” said Dr. José Antonio Meade Kuribreña, the Minister of Finance and Public Credit, when inaugurating the Seminar of the International Federation of Pension Fund Administrators (FIAP), jointly organized by FIAP and the Mexican Association of Afores (Amafore).

In his speech, the Federal authority said that the pension system offers significant advantages to workers, among them “…greater fairness, ensuring the rights to the resources contributed by members, and above all, the guarantee that workers will not lose the resources they have paid into their individual accounts. 15 years on, the system has had good results,” he said.

Meade then commented that the Afores system has generated the best returns in the country, offering portability, but above all “…we can say that Mexico’s pension liabilities are not a cause for concern, and, to the contrary, the retirement savings system offers a stable source of long-term financing.”

Finally he said that despite the current volatility of international markets, the Mexican government yesterday issued debt for almost one thousand million dollars on the Japanese market “which reflects the strength of the Mexican economy and investor confidence in the country, since this is the biggest issuance of any emerging sovereign country, with no guarantee, in the last 10 years and the first Samurai bond without guarantee for an issuer since the 2008 crisis.”

The placement “proves that Mexico is today an issuer with access to practically all economies and all markets at the different terms,” he emphasized before the representatives of the pension systems of numerous countries.

Previously, in the welcome address, Oscar Franco, the Executive President of Amafore and also Vice-president of FIAP, commented that the seminar entitled “Opportunities and Challenges of the Individually Funded Systems in a Globalized World,” had brought together specialists from more than 20 countries and that the experiences being shared in this event would undoubtedly accrue to the benefit of the respective pension systems.

He explained that this event is part of the activities organized by Amafore to commemorate the 15th anniversary of the reform of the pension system in Mexico.

The President of FIAP; Guillermo Arthur, on the other hand, said that countries had been strengthening their systems over the years in order to ensure the concurrent development of their economies. “A second generation of reforms is being put in place in some countries. In Chile, for example, there was a reform in 2008 that enabled incorporating self-employed workers and promoting pension culture, so that workers can build their pensions with voluntary contributions. In contrast, more than 60 countries with defined benefit (PAYGO) systems, especially in Europe, have increased contribution amounts, and slightly more than 20 have increased the retirement age in an attempt to contain their pension liabilities.”

During the first conference of the seminar, David Blake, Director of the Pensions Institute and Professor of Economy of Pensions in the Cass Business School of City University in the United Kingdom, said that most people do not consciously plan the financing of their life cycle, especially because it entails a commitment to initiating and maintaining a long-term saving and investment program. “Why don’t people save? Because the habit of saving requires a lot of self-control, similar to giving up smoking or going on a diet,” he said. “For people to start saving, you have to tell them about the amounts they can earn annually on what they accumulate in their savings accounts, instead of what they lose by not saving and the risk of living in poverty while having access to an income,” he added.

Given this situation, he said that it was important to change the understanding of financial decisions, especially when making long-term savings decisions like those entailed in pension plans.

The 2012 FIAP Seminar will end on Friday June 1, with an address by Dr. Agustín Carstens Carstens, Governor of the Bank of Mexico.

Download here the Press Release Nro. 1